A first step for the global poor – shatter six myths

Abject poverty takes a terrible toll. We can stop it. But we must start by separating fact from fiction.

ByMark LangeMarch 10, 2008

San Francisco — Could it be possible to eradicate abject poverty in one lifetime? Ever since it was first asked, the question has seemed an improbable wish – a salve for the heart, untenable to the mind. But today, the answer is as clear as it is imperative: Yes.

The idea that every living person can have the basics essential to human survival – and from there, begin to climb the ladder of economic development – is a prospect within reach. It does not require a master plan that solves all the world's problems. It does demand that wealthy nations change their approach in ways both subtle and significant.

It also means that the world's poorest – the last billion people who barely survive on the equivalent of less than $1 a day – must turn from lifetimes of bleak experience and look with higher expectations toward what is possible.

Today, the "average" person on the edge of survival is a child. Within the next hour, 1,200 more of them will perish. There are no easy solutions. But there is a clear path toward progress.

Let's start by unpacking a few myths that impair popular thinking about global poverty.

It's an intractable problem.

Not so. In 1981, 1.5 billion people survived on less than $1 a day, according to World Bank household surveys. By 2001, that number had dropped 27 percent, to just over 1 billion. That means well over 400 million people no longer face the lethal burden of extreme poverty. The diverging exception is sub-Saharan Africa, where rich nations must operate differently – and can.

There are too many impoverished people to help.

A bogus excuse. Historically, the world's poorest covered the globe. That's no longer the case. The mid-tier developing world in much of South and Central Asia is steadily and remarkably rising in prosperity. The last billion who suffer extreme poverty are concentrated in fewer than 60 very small sub-Saharan, Asian, and Latin American countries, which means we've never been in a better position to eradicate it.

Moral obligation is enough.

Apparently not. Alleviating suffering, the prevailing call-to-action among the G-8, nongovernmental organizations (NGOs), and celebrities, has not compelled adequate action on the part of developed nations. We need reasons that engage a broader political spectrum. Humanitarian, labor, and environmental goals must be joined with economic and geopolitical priorities, each in service to the other.

The boys of the last billion, fodder for African warlords and Saudi-funded extremist madrassahs, are prone to carrying chaos across borders. Post-9/11 terrorpolitik makes ending extreme poverty a security priority. The left responds to the promise of a more compassionate world; the right, to the threat of a more violent one. We must enlist both.

If aid is good, more aid is better.

Not really. Since 2001, the Bush administration has tripled foreign assistance worldwide, and quadrupled it in Africa. And NGOs build their identities around raising and giving money. But more funding isn't the most critical issue.

While humanitarian assistance has saved millions, consider this startling conclusion from a recent study by the Center for Global Development: When aid rises to 8 percent of a recipient nation's gross domestic product, it has zero effect on economic growth. Above that, it has a negative effect.

The serious challenge is one of coordination. Chronic shortages of skilled citizens in the very worst-off nations mean that more resources simply can't be deployed effectively. Instead, donors, NGOs, and private philanthropies trip over one another, competing to give money away, rather than coordinating at ground level to get results. More isn't always better; smarter is better.

Globalization is hurting the poor.

By what measure? Agricultural reform and liberalized trade and investment have lifted nearly half a billion people out of extreme poverty in China and India, supporting their survival.

No doubt global competition has caused major upheaval, which can hit the poor especially hard. That should lead to better efforts to buffer the last billion from globalization's shocks – but we shouldn't deprive them of its abundant benefits.

Trade invariably generates mutual gains. Unfortunately, given the win-lose quality of political brawls, many don't believe in mutual gains, assuming that one country's wealth must be explained by another's exploitation. This breeds cynicism about globalization.

For anyone on the edge of survival, the real risk isn't globalization. It's isolation. The most sustainable contribution that developing nations can bring to world markets is their labor. It produces far more widely felt economic benefits than extraction of natural resources such as oil. But with labor capacity in eastern and central Asia growing so dramatically, potential workers in the very poorest nations risk being shut out of world labor markets for another two centuries.

None of this is to suggest that globalization's negative effects should go unchecked. Trade protesters aptly call out Western hypocrisies, corruption, and exploitation. They help governments make rules to protect the weak. But developing nations that grow their economies through global trade are able to afford more mature regulatory regimes, enforcement of decent labor standards, and better environmental technology. Cutting off trade is a death sentence.

Wealthy nations must work to reduce poverty everywhere.

Why? This well-intended ethic is driven by a natural – but in this case dangerous – human tendency to focus on relative standing, independent of absolute wellbeing.

Imagine a Masai tribesman in the Serengeti, describing himself as happier when the grass thatch on his hut is thicker than his neighbor's. In absolute terms his wealth is negligible. And by first-world standards he might consider it miserable. The primacy of relative inequality means that, especially as globalization puts a sharper focus on disparities of wealth, egalitarian ideals prompt wealthy nations to devote resources to reduce relative poverty everywhere.

This seems like the fair objective, pursued in the belief that reducing disparity supports social stability. But it's wrong.

There's an enormous opportunity cost to devoting limited resources to better-off, mid-tier developing countries. Their citizens, while struggling, aren't dying by the millions every year. The last billion are. The fact that rich nations spread resources broadly and thinly may be easy to explain politically, socially, or economically – but it's much harder to justify ethically if we really believe every life is of equal value.

Today, first-world ideals of relative equality lead to diffuse aid and philanthropic efforts, effectively paid for with the lives of the poorest. The desire to support relative well-being is a critical distraction from the question of absolute human survival.

If we're serious about saving lives, rich nations should devote disproportionate financial and technical resources to the very worst-off – to build a floor for their survival, and to deliver the basis for self-sustaining growth and wealth of their own creation.

What's true

Getting past popular misperceptions that impede progress for the very worst-off, what is true about extreme poverty?

Today, it overwhelmingly slaughters the young.

The gap between what the rich world has promised at United Nations summits, but has yet to actually deliver, means that every year four million more children won't make it to their fifth birthday.

We have the resources to eradicate it.

The world's richest 500 individuals have the same income as the poorest half-billion. The developed nations aren't close to the UN commitment to devote 0.7 percent of gross domestic product to aid. The US is at 0.2 percent, and private and philanthropic sources don't come close to narrowing that gap in the poorest countries. But this isn't simply a redistributive exercise. We know more now about the progression from subsistence agriculture to micro-enterprise and light, sustainable manufacturing exports – and how self-directed growth lifts people out of poverty.

It is a question of will – and working smarter.

For wealthy nations: it is the will to listen harder to those we would serve, to experiment, to adapt, and to work smarter. For citizens in civil society among the poorest nations: it is the will to push past disappointment, past corruption and cynicism about the legacy of colonialism, and to believe in what is possible.

The rest of this series will explore the path out of extreme poverty for the last billion. What have we tried, and why have we gotten stuck? Where do we agree? Are we prepared to succeed? And if we are, what would it take? (Tomorrow: Why aid has made so little difference.)